The American Invents Act – New Risks for Seattle Businesses

On September 16, 2011 President Obama signed into law the Leahy-Smith Patent Reform Act, also called The American Invents Act. In a previous Copyright Cow blog, Senate Passes Patent Reform Bill (H.R. 1249) — What it means for Seattle Businesses, I highlighted the changes the law will bring to patent law. Businesses should note that the Act does not create a true First-to-File System. The Act creates a modified “first-to-file” system. A true first-to-file system prevents others from attempting to claim rights in a patent after a patent has been filed. The Act is a modified “first-to-file” system because it retains a limited one-year grace period for inventors that make a public disclosure or file a patent provisional. Thus, the Act still offers protection to inventors that publically disclosed their invention but are slow to file for a patent. For more information on first-to-invent vs. first-to-file systems see previous Copyright Cow blog article at: Pending Changes to US Patent Fillings.

This article examines what businesses should do to protect their intellectual property under the new Act. The provisions of the new Act have a variety of effective dates. Some changes to the law happen immediately. Other changes will not be implemented until 2012 and 2013. This article examines the change to the modified “first-to-file” system that will be implemented on March 16, 2012.

Under the new Act, Seattle businesses will need to publically disclose their invention or file a patent provisional to ensure they have the earliest effect date. If they do not publically disclose or file a patent provisional they run the risk of loosing rights to their invention. For example, if business X invents a game changing renewable energy device but is slow to publically disclose or file a patent provisional and another company files for the patent, then business X just lost their intellectual property worth hundreds of millions of dollars.

To protect their business, the easiest thing a Seattle business can do is file a patent provisional. A patent provisional is a legal document filed in the United States Patent and Trademark Office (USPTO). It establishes an early filing date, but it does not mature into an issued patent unless the applicant files a regular patent application within one year. A patent provisional application includes a specification, i.e. a description, and drawing(s) of an invention, but does not require formal patent claims, inventors’ oaths or declarations, or any information disclosure statement (IDS). Finally, because no examination of the patentability of the application is performed, the USPTO fee for filing a provisional patent application is significantly lower than the fee required to file a standard non-provisional patent application.

Provisional Patent Applications:

Provisional patent applications are an integral element of corporate patent filing strategy. US-based patentees can use provisional applications as a method for obtaining an early patent application priority filing date. Applicants then have one year to file a traditional patent application. Provisional applications have a very low filing fee and do not require the same level of formality as a patent application. In this sense, a provisional application is an inexpensive way for a business to buy itself time before deciding on the costs of applying for a patent. A provisional filing allows an applicant to obtain an early filing date for a low cost and delay or avoid further prosecution costs. Finally, with provisional applications, the patent term is not lost but simply shifted forward in time.

Delaying Decisions:

The one-year delay can be important in providing applicants with time to determine whether the particular avenue of technology will be commercially important.

Grace Period for Disclosure:

Under the Act, an inventor’s early filing date is important because any disclosure by a third party prior to the inventor’s filing date will be seen as prior art that can negate patentability. There are two major exceptions to this general rule: a third party disclosure within one-year of the applicant’s filing date does not count as prior art if either (1) the inventor had already disclosed the invention prior to the third party disclosure or (2) the third party disclosure was somehow derived from the inventor. This provision offers an incentive to applicants to publically disclose their invention or file a patent provisional so they can obtain the earliest effect filing date and defeat any potential prior art.

Public Disclosure:

Public-disclosure offers similar benefits to that of a provisional application in that it is inexpensive, has few formalities and provides an additional year of delay. Public disclosure can be cheaper and easier than filing a patent provisional application. In order to count as public disclosure, the disclosure must be “enabling”, meaning it must teach someone “of ordinary skill in the art” how to actually duplicate the invention. Public disclosure is considered to take place once there is public accessibility to the printed publication. For instance, in the case of a doctoral dissertation, public disclosure is considered to be the date when the university catalogs the dissertation and makes it available to the public. The disclosure allows an applicant to buy an additional year of delay with few capital expenditures and without losing patent term but instead merely shifting the term forward in time.

Problems with Public Disclosure: There are a number of problems with choosing public disclosure over filing a patent provisional. First, a pre-filing disclosure would substantially negate the potential for obtaining international patent rights because most other countries have a more absolute rule related to public disclosures. Most other countries hold that public disclosures negate patentability. Second, a public disclosure eliminates the ability of an applicant to pursue technology development in secrecy. (Provisional applications are not made public until well after their one-year expiration.) Finally, the lack of formal requirements associated with the public disclosure could create potential future litigation.

Conclusion:
The American Invents Act creates a modified “first-to-file” patent system. A true first-to-file system prevents others from attempting to claim rights in a patent after a patent has been filed. The Act is a modified “first-to-file” system because it retains a limited one-year grace period for inventors that make a public disclosure or file a patent provisional. Thus, the Act still offers protection to inventors that publically disclosed their invention but are slow to file for a patent. To protect their business, the easiest thing a Seattle business can do is file a patent provisional. Contact Timothy McCormack at McCormack Intellectual Property Law Business Law P.S. for Seattle Patent Litigation questions or any other intellectual property related questions.

Special Thanks to Eric Harrison, Law Student from the University of Washington

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Copyright Cow™ is the Blog and alter-ego-Blogger name for Timothy B. McCormack, a well established and successful Seattle-based intellectual property, technology and business lawyer.

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This blog provides is not intended to give legal advice and is not a substitute for the same; if the reader has a concern they should contact a knowledgeable attorney.